Financial History 25th Anniversary Special Edition (104, Fall 2012) - Page 24
on the NYSE reported a yearly high. The
aeronautics companies were not immune
to this damaging effect. Boeing lost one
and a quarter points, equivalent to 3.6% of
the company’s worth, by the close of the
day following Sputnik’s launch (the NYSE
opened on Saturdays back then). Grumman’s stock, by contrast, did not suffer as
badly at first, but the remainder of the following week was not kind to either company. With the majority of companies on
the NYSE posting negative results for the
week after October 4, Boeing lost nearly
another 4% of its stock value and Grumman plummeted almost 10%.
The apparent Soviet dominance in the
Space Race continued in April 1961 with
the successful launch and return of Yuri
Gagarin, the first human in space. This
remarkable achievement, a much better
demonstration of Soviet capabilities than
the launch of Sputnik, failed to have the
same type of impact on the markets or
upon the American psyche that the launch
of Sputnik created. Boeing gained just
under 1% of its value while Grumman
lost 2% and NAA gained 2% during the
days following Gagarin’s pioneering trek.
While some newspapers carried stories
about how this was a further demonstration of Soviet leadership in the Space Race,
the acknowledgement of Soviet leadership
by the American government and public
generally (not a passive sentiment, to be
sure) made Gagarin’s feat less of a shock
than the utter surprise that was Sputnik.
John F. Kennedy’s speech before a joint
session of Congress on May 25, 1961 galvanized the American effort to gain technological mastery over the Soviets in the
Space Race. At the beginning of the 1960s,
many thought the Soviets were in the lead
by a span of several years. JFK admitted as
much and argued that in order to have a
fighting chance of catching the Soviets, the
nation had to commit itself to the tough
goal of landing a man on the moon by the
end of the decade.
A year and a half after JFK’s speech,
prominent members of the American scientific community continued to predict
the Soviets would win the race to the
moon, barring a “sudden breakthrough.”
So clearly JFK’s speech was not an instant
turning point for the aeronautics industry or the nation as a whole, but has
come to be seen as such due to America’s eventual success in the Space Race.
This conclusion is bolstered by analysis
Commuters read newspapers with headlines announcing the failure of US Vanguard missile, 1957.
of aerospace company stock prices, which
were detached from the President’s speech.
Boeing’s stock rose only one-eighth
of a point after the speech, suggesting
that investors considered the speech more
bluster than the harbinger of big government contracts. Similarly, TRW’s stock
experienced the typical daily fluctuations,
showing no significant reaction to JFK’s
speech (it fell marginally the day after).
Grumman’s stock jumped 1.8% on the day
of the speech, but the increase appears to
have been independent of the President’s
soaring rhetoric. Aerospace stock did not
increase dramatically immediately following the speech because NASA’s planning
had already put the US on a slightly longer
but very similar deadline, with circumlunar (moon orbit) flights planned for late
in the decade and manned missions to the
lunar surface not long after. Moving up
this deadline served as little more than an
increased logistical challenge to the engineers behind the project and a nice bit of
PR for JFK and the United States.
22 FINANCIAL HISTORY | Fall 2012 | www.MoAF.org
Apollo 11, the first mission to land a
human being on the moon, was a major
event in American and world history.
Such a remarkable occurrence, however,
had little discernible effect on the stock
prices of the big three aerospace companies. TRW, Boeing and even Grumman
suffered losses over the course of the week
following the historic mission. It might
have been expected that the perfect performance of Grumman’s groundbreaking
Lunar Lander would have shone favorably upon the company, but it lost almost
4% of its value over the following week.
Boeing’s value fell by 2.4% over t